Why a Developer Set to Transform Greer Stadium Compares Plan to 'Beachfront Property'

As a 30-year veteran of Wall Street, Tom Middleton faces an intriguing task: attracting investors to a mixed-use development in Nashville loaded with apartments priced below market rates and where 40 percent of the property would remain undeveloped.

Middleton believes he can make a convincing case as he prepares to raise equity for the $101.3 million project he is proposing to revitalize the home of Greer Stadium. The administration of Mayor Megan Barry also believes in Middleton and his business partners, third-generation Nashville developer Bert Mathewsand renowned music producer T Bone Burnett. The administration has announced its intent to award that trio, operating as Cloud Hill Partnership, the exclusive rights to the 21-acre property near Wedgewood-Houston and about a half-mile outside the downtown interstate loop.

In an interview, Middleton framed his pitch to prospective investors as scrutiny starts to intensify over the winning Cloud Hill Partnership bid. Critics, such as at-large Metro Councilman John Cooper, have zeroed in on financing — focusing on the fact that Cloud Hill offered to pay Metro $1 million of lease payments while the runner-up, a team led by Dallas-based developer Cambridge Holdings Inc., offered to pay $83.9 million to lease the stadium site. Cooper's complaints hint at the debate to come, though we're very early in the process: Cloud Hill has not cemented a development agreement with Metro; those negotiations had not started before one of the four losing bidders appealed Metro's decision, pausing any deal talks with Cloud Hill. Any redevelopment plan will require approval from Metro Council and the city's Parks and Recreation board.

Middleton, who lives in New York City, previously worked at The Blackstone Group, Salomon Brothers and spent many years at Merrill Lynch, ascending to become the firm's vice chairman of investment banking. He also has been immersed in the nonprofit world, serving for a decade on the global board of The Nature Conservancy. The Greer project, Middleton said, is his first real chance to blend both realms. He said Burnett pitched him on his vision about two years ago.

"I'd like to go out on this project and look somebody in the eye and say, 'I have a great deal for you' — before I even start talking about the social impact piece of this," Middleton told me. "That will be the test: that we've created something that is sustainable and that we've maximized our access to capital ... and not feeling that the term 'social impact' costs money."

"In a low-interest-rate environment ... and as a person who now relies primarily on investment income, an 'X' percent return over 15 or 20 years is pretty attractive. This may not be the investment where I think I'll make 5X my money, but there aren't a lot of things out there where you can make 6, 7, 8 percent return on money," Middleton said. "I think this project has an opportunity to provide at least a slug of that. None of us are going into this thinking this is all about making a killing, at all."

Cloud Hill proposed 294 apartments; more than 8 acres of parks and open space; 121,000 square feet of office space targeted toward creative companies; and almost 56,000 square feet of retail space including a food hall, restaurants and bars. The project also would include a 24,000-square-foot studio space and a business incubator and community space. Both those features are nods to Wedgewood-Houston's cluster of artisans, makers and entrepreneurs under pressure as they confront fast-rising rents as the neighborhood redevelops. ( Click here to see the full winning proposal from Cloud Hill.)

By contrast, the runner-up bid from Cambridge Holdings proposes more office space and 36 percent more housing units, a smaller share of which would be affordable or workforce housing, one factor that may help explain the wide gap in proposed lease payments.

"The city has an under-utilized asset that can be transformed into really a very impactful asset — not necessarily one that will throw off a ton of cash flow, but one that is going to solve a problem and create a hell of a lot of value," Middleton said. "The city looks at Greer as, 'I can transform this from a desolate parking lot ... without writing checks. I'm not doing this to make a ton of dough. I'm recognizing the value I'm creating here.'"

Seven of every 10 of the Cloud Hill apartments would be priced to be attainable for people making no more than the area median income, meeting the standard definition of affordable and workforce housing. Metro has identified a shortage of that housing, especially close to where jobs are concentrated, as a particular issue in the last year or two as the region's booming economy and population growth has driven housing prices and the going rate for urban apartments to record milestones.

Cloud Hill is trying to "create the functional equivalent of beachfront property," where some people will pay a premium to live or work there, Middleton said. "What a vibrant environment we'll have: You're right inside a park, near this historic place [Civil War-era Fort Negley], with an incredible amount of culture and diversity. Can you combine the ability to attract that kind of cash flow ... and still create affordability for most of the inhabitants and the surrounding neighborhood? It just felt to me like, boy, if there's any place that we can make that work, it's in a place like Nashville and specifically a place like Greer."

Cloud Hill's pitch to Metro featured letters of interest from at least two potential investors in the development. One is RBC Capital Markets; the other is Bridges Ventures, headquartered in London and a noted "impact investor" that focuses on developments with social and environmental benefits. Middleton said it's too early to make a serious run at pitching investors because the particulars of the project haven't been finalized with Metro.

Middleton made clear the project team doesn't have full financing in hand, counter to the impression sent by the seven-person Metro committee that vetted the five bids for the Greer development rights. "Appears to be fully funded," the committee wrote while giving Cloud Hill a perfect 30 points in the category of financial considerations.

A member of the committee, who requested anonymity while the losing bidder's appeal is ongoing, said the comment is a reference to the fact that Cloud Hill is not seeking incentives from Metro. The runner-up bid submitted by Cambridge Holdings sought about $7 million of public aid.